I read the new RBI governor’s speech twice today because quite frankly I wasn’t able to grasp all the things he had announced at the first read.
This is quite amazing because it covers an incredible amount of ground, and takes a very liberal, progressive and long term view of the economy – something that we haven’t seen for a while. The speech can be found on this link and Business Standard has a good summary of the announcements that can be found here.
My first idea was to write about some things that would impact a regular person directly like the CPI linked bonds he spoke about, but that is simply taking too narrow a view. In this particular case, the steps that don’t directly impact you or the steps that are longer term in nature like building individual credit histories (not a new idea) are likely to impact you a lot more than any purchase of CPI linked bonds.
What Dr. Raghuram Rajan showed today was how RBI can take several small steps to liberalize the economy, instead of fixating over the Repo rate or conducting strange operations to drain liquidity which have terrible unintended consequences.
The Rupee and the market both gained today and normally I hate ascribing any market moves to an event, the speech quite clearly did the trick today, and I myself am feeling a little positive after a very long period.
I realize that there is a lot of difference between a speech and executing these steps, but if you don’t have a plan to execute then you there is no hope of execution. In this case there is a plan and let’s all hope that the RBI stays on course.
As I was reading through the speech, I came across the part where Dr. Rajan said these were his plans for the “short term time table” for the RBI, and I thought to myself, wow if this is really short term, I can’t wait to see what long term is like.